Is Social Media Monitoring Ready for Prime-Time?

Microsoft announced recently that they are launching their own social media listening software tool (currently in closed beta), called Looking Glass, which will according to Microsoft “make social media actionable for business.” Pricing for LookingGlass has not been established.

Impacts of Big Boys on Social Media Monitoring

Microsoft’s entrance into the social media monitoring software category will have two mid-term consequences. First, the percentage of companies using some sort of social media listening software – LookingGlass or otherwise – will skyrocket. This pattern is as familiar to long-time Web watchers as the Cowboys choking in the playoffs. Small start-up companies innovate and create categories, and then the big guys jump on board and expand the user base.

Pay-per-click search engine advertising was pioneered by GoTo, and took off once Yahoo! bought it. The concept was later perfected by Google, which has built a company the size of a modest European nation based on it. Web site tracking was first popularized by WebTrends and a six pack of other, smaller companies. But widespread adoption of Web analytics occurred only after Google bought Urchin and created Google Analytics.

Similarly, Google made Web testing and optimization de rigeur when it rolled out Google Optimizer, broadening the market for multi-variate testing first developed by Optimost and Offermatica. Microsoft’s creation of Hotmail dramatically increased the total number of email boxes, making it routine for people to have more than a single account.

The big guys find a pond, and make it an ocean.

Social Media Monitoring Bargains Ahead

The second scenario that will unfold is that the cost of social media monitoring software will fall to zero. LookingGlass will eventually be free, and Google most assuredly will have their own system eventually – possibly including Google Analytics, Google Sidewiki, and Google Wave data. Neither of these companies have any illusions (or need) to make a ton of cash on social media monitoring software. Rather, they’ll use the collected data to improve ad serving, or to develop complementary products that can make money.

While the entrance of Microsoft will force the current providers to continue innovating, it should not collapse the market. Instead, it will put a greater premium on customer service and support, fortunately an area that most companies in this area (especially Radian6 and Spiral16 in my personal experience) already excel.

The casual, small and medium size company will use the free social media listening tool. The larger companies that have more chatter and want custom features and solid support, will continue paying for that level of professionalism.

Further, the entrance of a major company – and presumably marketing dollars – will grow awareness of monitoring overall, resulting in net growth for the best of the current crop of players. I suspect that the best source of business for Omniture these days are companies that started with Google Analytics because it was free and easy, and then realized that they needed more detailed reporting and customization.

Competition will Continue

So, the social media monitoring software business will not be owned by one company, in my estimation. But, a shakeup is definitely on the way, and since you can’t swing a cat by the tail (don’t try this at home) without hitting a social media monitoring company, it’s a shakeup that’s healthy and perhaps overdue.

Who are you betting on to emerge as a leader in social media monitoring?